sefa Corporate Plan 2016/17 – 2020/21Presentation to the Portfolio Committee on Small Business Development
16th March 2016
2
PRESENTATION OUTLINE
• INTRODUCTION
• ALIGNMENT WITH DSBD STRATEGIC GOALS
• sefa’S CORPORATE PERFORMANCE
• ORGANISATIONAL ANALYSIS
• sefa’S STRATEGIC OBJECTIVES
• STRATEGIC PROGRAMMES
• STRATEGIC OUTCOMES
• DEVELOPMENT IMPACT TO TARGET GROUPS
• BALANCED SCORECARD
• BUDGET
3
INTRODUCTION
The development of the Corporate Plan was shaped by an extensive consultation process
and organisational review that included:
Ongoing engagements and consultation with the Executive Authority, the Department of Small Business Development.
Regular reporting and feedback from sefa’s shareholder, the Industrial Development Corporation of South Africa Limited (IDC).
sefa’s quarterly reporting and engagement with the Portfolio Committee on Small Business Development (National Assembly) and Select Committee on Small Business Development (National Council of Provinces- NCOP).
sefa Divisional Corporate Planning – assessment of year-to-date divisional performance and the identification of divisional priorities and targets.
sefa’s Executive Committee strategic planning sessions.
sefa Board Corporate Planning session – review of organisational performance and the identification of key strategic priorities.
Government Economic Policy – NDP, NGP, IPAP and MTSF
SMME and Co-operative enterprise development and promotion:
represents an important economic intervention for sustainable economic growth, job creation and innovation
unlocks growth potential in South Africa and to address poverty and inequality.
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INTRODUCTION (CONT.)
sefa support from the National budget is projected to decline by ±R200m per
annum for the MTEF period, therefore a cost and revenue management programme
will be aggressively implemented focussing on:
Cost Management
› Contain the salary bill at current expenditure levels with an allowance for annual cost
of living adjustments.
› Containment of operating expenses.
› Reduction of impairments.
› Aggressive collection and turnaround on the property portfolio.
Revenue Management
› Increased focus on loan repayments through the use of specialised collections and
post investment management.
Corporate plan has been aligned with the DSBD mandate and strategic plan.
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ALIGNMENT WITH DEPARTMENT OF SMALL BUSINESS DEVELOPMENT
DSBD Strategic
outcome-oriented goals
sefa Strategic Objective sefa Programmes
An effective and
efficient administration
Build a financially sustainable and viable sefa
Improve Financial Ratios
Build efficient and effective process and systems
Adopt best practice governance
Build a high performance organisation
Build an efficient and effective sefa that
is performance driven and sustainable.
Governance, Risk and Compliance
An enabling
environment for
competitive small
businesses and
cooperatives
Expand access to credit and finance to informal and micro-
enterprise sector.
To consolidate the Direct Lending investment activities and
strive toward improved portfolio quality; and to redirect its
investment activities proactively in support of government
policy initiatives.
Facilitate a programme of Wholesale Lending through strategic
partnerships.
Increase the utilisation of guarantee indemnity scheme.
Access to finance for SMMEs and Co-
operatives
o Informal Sector and Micro-
Enterprises Finance
o Direct Lending
o Wholesale SME Lending
o Co-operative Enterprise Lending
o Khula Credit Guarantee
Marketing, communication and
stakeholder relations
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ALIGNMENT WITH DEPARTMENT OF SMALL BUSINESS DEVELOPMENT (CONT.)
DSBD Strategic outcome-
oriented goals
sefa Strategic Objective sefa Programmes
Sustainable small business
and co-operatives in rural
and township
communities
Grow our customer base through
targeted support (Black-owned
enterprises, women-owned
enterprises, youth-owned
enterprises, enterprises owned by
people living with disabilities and
enterprises located in priority rural
provinces.
Access to finance for SMMEs and
Co-operatives
o Informal Sector and Micro-
Enterprises Finance
o Direct Lending
o Wholesale SME Lending
o Co-operative Enterprise Lending
o Khula Credit Guarantee
Post Investment Management
Property Management
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sefa CORPORATE PERFORMANCE 2012 - 2015 Approvals - R2,5bn
Disbursements - R2.1bn
SMME and Co-ops - 115 131
Jobs -234 534
2013/14 2014/15 2015/16
Business Case (Enterprisesfinance)
22565 50258 101445
No of EnterprisesFinanced
28 364 46 407 68 724
Business Case (Jobsfacilitated)
29 313 58 645 108 835
No of Jobs facilitated 19 853 46 402 60 169
0
20000
40000
60000
80000
100000
120000
Enterprises Financed & Jobs
637
795
1075
440
10651009
544
738
955
198
822
1295
0
200
400
600
800
1000
1200
1400
2012/2013 2013/2014 2014/2015
Approvals and Disbursements - R'million
Approvals (Business Case) Loan Approvals
Disbursements (Business Case) Disbursements into the Economy
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SMMEs and Co-operatives Number Amount
Informal & Micro Enterprises 113,052 R462m
Small & Medium Sized Enterprises 2,079 R1.6b
Black-owned 96,607 R1.5b
Youth-owned 26,710 R449m
Women-owned 110,970 R846m
Development
Impact
sefa’s CORPORATE PERFORMANCE 2012 - 2015
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ORGANISATIONAL ANALYSISSTRENGTHS• The uniqueness and the relevance of sefa’s mandate.• Political & national consensus on importance of small business development as a key component for the
development of the SA economy• Availability of National Voted Funds to support operations of sefa in its development interventions.• National presence of sefa – Regional office network and its partner institutions.• Influence to convene and mobilise strategic partners and alliances in execution of the organisational strategic
objectives.• Adaptable in-house developed Loan Management system (sefaLAS). • Utilisation of internally developed Structured Finance Solutions to develop sustainable SMMEs & Co-operatives
and manage risk.• Established systems of internal control and credit assessment processes
WEAKNESSES• Huge demand for SMME financial and non-financial support that cannot be fulfilled by sefa alone. • Limited due diligence capacity especially in non-contract-based finance• Dependence on other government agencies for SMME & Co-operatives pre- investment support.• Limited talent management, promotion and career & development pathing resulting in loss of key staff and/or
top performers.• Undifferentiated approach towards different SMMEs, Co-operatives & economic sectors and types of
applications regardless of (size and type of facility required such as acquisition, bridging or start-up funding).• Financing instruments are not designed to address the needs of social enterprises such as co-operatives.• Capacity and financial sustainability of sefa’s intermediary institutions – (high end-user charges and limited
outreach)• Low levels of collections
SWOT
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ORGANISATIONAL ANALYSIS (CONT.)
OPPORTUNITIES• Ability to leverage public and private sector financial and non-financial resources
to reach markets that sefa will not be able to service with own resources.
• Expansion to sectors which have high propensity to promote growth and employment.
• Access to International experiences and best practice programming.
• Political and financial support to grow sefa’s loan book.
• Funding of social enterprises, such as co-operatives.
• Ability to leverage shareholder (IDC) experience and loan book to grow and build the institution.
• Utilising other institutions to facilitate deal origination & to provide value added services.
• Utilisation of internally developed Structured Finance Solutions to develop sustainable SMMEs manage risk
• Enhance sefaLAS to facilitate standardisation and exception reporting.
• Market the sefa brand to target market
• Building and entering into partnership with a new breed of intermediaries to facilitate and support in the
execution of the sefa mandate
THREATS
Inability to meet high key stakeholder expectations (IDC, EDD, DSBD & NT) can result in low financial support
sefa’s delivery model is not well understood, notably, the use of intermediaries and their pricing of loans to end
users.
Weak GDP growth negatively affects the SMME sector prospects and increases the rate of impairments.
Legal difficulty in enforcing and salvaging collateral in the event of SMME default.
Unstructured and uncoordinated SMMEs & Co-operatives interventions between sefa, government agencies and
other spheres of government.
Notion of entitlement to DFI funds
Limited funds available to capitalize sefa
SWOT
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STRATEGIC RISK
Business Units
Enterprise /
Operational
RiskCredit Risk
Risk Control
& Management
Risk Assurance
Risk
Governance &
Oversight
Internal Audit
Board and Board Committees
Risk Philosophy and Appetite
Compliance
On
go
ing
Co
mm
un
icatio
n a
nd
Rep
ortin
g
sefa ERM Framework
2nd
line of defence
1st
line of defence
3rd
line of defence
sefa’s Major Strategic Risk• Organisational Strategic Balance - The inherent tension between the developmental mandate and financial
sustainability objectives which may disrupt the organisational strategic focus and balance;• People- Insufficient levels of adequately skilled, motivated and performance driven human resources to execute
on the mandate of the organisation;• Financial (Collections) - High levels of impairments and losses; and• Customer - Inability to timeously, effectively and efficiently deliver products and services that respond to the
needs of the clients of sefa.
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sefa’s STRATEGIC OBJECTIVES
Expand access to credit and
finance to finance informal and
micro-enterprise sector
Consolidate the Direct Lending
activities, improve the portfolio
quality and redirect investment
activities to proactively support
government policy initiatives
Facilitate a programme of
Wholesale Lending through
strategic partnerships
Increase the utilisation of
guarantee indemnity scheme Grow the customer base
Build a financially sustainable
and viable sefa
Improve financial ratios
Build efficient and effective
processes and systemsAdopt best practice governance
Build a high performance
organisation
Build one sefa culture
BUILDING AND CONSOLIDATING FOR GROWTH ……
1
4
2
3
9
8
7
6
5
11
10
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STRATEGIC PROGRAMMES
StrategicProgrammes
Management of thesefa Property
Portfolio
Client SustainabilityLoan RepaymentPost InvestmentSupportWorkout andRestructuring
Risk and CreditManagementComplianceManagementInternal AuditCorporate Secretariat
Build a strong andeffective sefa brandemphasizingaccessibility toSMMEs and Co-ops
Informal and Micro EnterpriseCreditDirect LendingIndirect Lending (partnership)Co-operative Enterprise LendingKhula Credit Guarantee
Financial ManagementHuman Resource ManagementInformation andCommunication TechnologyCorporate Planning andReporting
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PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT
Strategic Initiatives• Build and strengthen partnerships in
sectors where informal and micro enterprises operate
• Develop a dedicated focus on unserved and underserved priority provinces
• Support MFI growth and development, new product development and new partnerships
• Fast-track implementation of approved pilots and transactions and document lessons learned (Fresh Produce Market Initiative)
Strategic Objective
To increase the level of economic activity of
survivalist, informal and micro enterprises,
particularly those operating in rural and peri-urban
areas, through provision of access to credit, finance and
business support
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ALTERNATIVE MICRO ENTERPRISE & INFORMAL SECTOR MODEL APPROVED
Fresh Produce Market based lending system
The objective is direct provision of affordable credit to informal/micro enterprises sourcing goods
from the Fresh Produce Markets across South Africa
Pilot project is underway at the Durban and Mangaung Fresh Produce Markets.
Strengthening the purchasing power of informal sector traders at the Fresh Produce Markets
Developing a technology based platform to assess and approve large numbers of
microenterprises for credit to procure supplies from Fresh Produce Markets
Empowering informal sector businesses that procure supplies from Fresh Produce Markets
through training and provision of pertinent market information that promotes informed decision
making.
• PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT
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ALTERNATIVE MICRO ENTERPRISE & INFORMAL SECTOR MODEL APPROVED CONT’D
Durban/Mangaung Fresh Produce Market Pilot Project
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT
Key information• Location: Durban and Mangaung• Jobs maintained: 11 900 over 3 years• Funding amount: R20m for loans and
R4.5m for establishment costs• Key Partners: Durban & Mangaung Fresh
Produce Markets, Traders Associations, Freshmark Systems
Project Description
sefa approved a R24.5m pilot project for the provision of affordable
credit to the informal traders of the Fresh Produce Markets (FPM) of
Durban and Mangaung.
The management of the two pilot markets agreed to assist sefa with
the implementation and facilitation of this project.
The project in essence entails the provision of affordable credit to the
informal traders.
• Weekly loans between R500 and R10 000 will be made
available to successful applicants.
• As long as the client repays the loan on the set date, that same
amount will be made available again on a revolving basis, for a
six-month period.
Traders/successful applicants will only be able to purchase fresh
produce with the loan from sefa, because the money will be disbursed
directly to the buyer’s market card. If repayments are not being
made, the buyer’s card will be blocked immediately, thus minimising
the risk of non-payments.
The project will also train the traders in entrepreneurship, financial
management, food packaging and storage and health and food safety.
After a successful pilot, informal sector operators will be enabled
access over R3 billion worth of turnover from the Fresh Produce
Markets around South Africa
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P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT – STRATEGIC OUTPUT
Strategic Indicator
Projected
2015/162016/17 2017/18 2018/19 2019/20 2020/21
Total –
Strat Plan
Approval (R’000)
97 000 97 000 106 700 117 370 129 107 142 018 592 195
Disbursements (R’000)
36 000 53 242 66 634 89 088 95 485 98 094 402 543
Enterprises Financed
42 000 46 200 50 820 55 902 61 492 67 641 282 056
Jobs Facilitated 63 000 69 300 76 230 83 853 92 238 101 462 423 083
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PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.2 DIRECT LENDING PROGRAMME
Strategic InitiativesConsolidation of the loan book• Review the Direct Lending Credit Policy and Investment
Guidelines• Improve the due diligence quality• Partnership with local chambers of commerce and
business associations
+Pro-active alignment to Government Policy• Develop and implement a differentiated product &
process - procurement set-aside across all spheres ofgovernment
• Be the preferred funder of the DSBD/seda NationalGazelles Initiative
• Targeted Scheme to support enterprises owned bypeople living with disabilities
• Facilitate the funding of market access linkages for theDFIs and SOEs localisation and value chain developmentinitiatives (IDC, Transnet, Eskom, etc).
• Develop innovative and differentiated product solutions& application process that respond the needs of SMMEsand Co-operatives
Strategic Objective
To align the Direct Lending Programme with
government policy objectives to ensure
maximum development impact through its funding
activities.
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P1.2 DIRECT LENDING PROGRAMME– STRATEGIC OUTPUT
Strategic Indicator
Projected
2015/162016/17 2017/18 2018/19 2019/20 2020/21
Total –
Strat Plan
Approval (R’000)
536 387 229 295 288 781 421 348 494 976 603 517 2 037 917
Disbursements (R’000)
496 655 212 310 267 390 390 137 458 311 558 812 1 886 960
Enterprises Financed
382 163 206 300 353 430 1 452
Jobs Facilitated 1910 817 1 028 1 501 1 763 2 149 7 258
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PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.3 WHOLESALE SME LENDING PROGRAMME
Strategic Initiatives• Introduce other financing instruments such
as (equity, quasi equity funding instruments)to improve the capital structure of strongRFIs
• Expand the Structured Finance Solution (SFS)Offering
• Transfer of Isivande Women’s Fund fromIndustrial Development Corporation (IDC) tosefa
• Increased funding towards the agriculturevalue chain with particular focus on GrainFarming, Poultry Farming and Green HouseFarming
• Establish an Enterprise and SupplierDevelopment (ESD) Fund
Strategic Objective
To build a diversified institutional base to
increase access to finance to SMEs and co-operatives.
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P1.3 WHOLESALE SME LENDING PROGRAMME– STRATEGIC OUTPUT
Strategic Indicator
Projected
2015/162016/17 2017/18 2018/19 2019/20 2020/21
Total –
Strat Plan
Approval (R’000)
284 000 245 816 329 087 457 050 502 889 507 968 2 042 808
Disbursements (R’000)
182 900 163 877 219 391 304 700 335 259 368 785 1 392 012
Enterprises Financed
196 216 238 260 286 315 1 315
JobsFacilitated
980 1 080 1 190 1 300 1 430 1 573 6 573
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PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
Strategic Initiatives
• Invest and build Cooperative Financial Institutions (CFIs) and Stokvels to contribute to financial inclusion
• Support and invest in Enterprising
Cooperatives
Strategic Objective
To increase funding to co-operative enterprises to
increase economic participation, especially
amongst women, youth and rural communities
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PRODUCT OFFERING FOR CO-OPERATIVES
Business Loans
Structured Finance
Solutions
An instrument
designed to provide
financial products and
services as well as
business support to co-
operatives and micro-
enterprises involved in
the value chain
(vertical and
horizontal)
CFI/ Secondary Co-
operatives On
Lending Loan
CFIs / Secondary Co-
operatives to on-lend to
individual members or
Primary Co-operatives for
enterprising activities
sefa Co-operative
Infrastructure
Programme
A co-funding co-operative facility which involves sefa, private sector and municipalities. sefa will
provide business loans and the municipality will
provide grant funding for business support and
training. Private sector partners will provide
technical support and market access through off
–take Agreements and other
support systems
sefa 80/ 20 Co-operatives
Upliftment Facility
A co-funding co-operative facility where sefa will partner with municipalities (local,
district, metro) to provide enterprise loans
and business support grants. sefa contributes
80% of the facility as enterprise loans and
20% is contributed by the municipality for
business support. Concessional lending rates will be charged
Inter- Agency
50/50 Co-
operative Facility
A partnership facility between sefa and
other state agencies whose mandate is to
provide funding to co-operatives. Each party will contribute 50% for on-lending plus 5% for
business support which will entail mentoring and
training, bookkeeping etc.
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
24
PRODUCTS OFFERING FOR CO-OPERATIVES – CONT.
Fun
ds Sector Focused/
Partnership Funds
• Specialised funds that will
focus on prioritised sectors
(Waste recycling
Agriculture Producing and
Service Sectors)
Gra
nts
Pre- Investment Support Grant – CFI
• Provides funding packages to
start up CFIs of maximum ofR500 k.
Pre Investment Support
• Partner with Seda, provincialagencies and not-for-profitcompanies to assist inproject development andscoping
Post Funding Support
• Technical support to beprovided by a TechnicalPartner in the sector
Equ
ity
Inst
rum
ents Quasi Equity
Instruments
• Fill the gap between debt
and equity. The instrument
will consist of
subordinated loans and
mezzanine debt.
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
25
CO-OPERATIVES VALUE CHAIN MODEL
The sefa and the Secondary Co-operative will enter into a loan
agreement which will cater for business loans and business support grant
The Secondary Co-operative will be responsible for the allocation of the
business loans to its member co-operatives and repayment of the loans
to sefa;
The Secondary Co-operative will be responsible for marketing member
products and services and negotiating off-take agreements with buyers
such as government and other buyers; and
The management of developed shared infrastructure such as distribution
centres for bulk buying will be the responsibility of the Secondary Co-
operative.
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
26
CO-OPERATIVES VALUE CHAIN MODEL (CONT’D)
Benefits
Bulk buying;
Value adding and processing;
Funds mobilisation;
Marketing of members’ products and arranging off-take agreements;
Business support e.g. bookkeeping etc.; and
Shared Infrastructure management, operation and maintenance.
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
27
TARGETED SECTORS
Waste Recycling Projects (Solid Waste)
Agriculture Production (Fresh Produce, Poultry, high value crop, ground nuts)
Services Sector (Bakeries, School Feeding Schemes, Retail stores, etc.)
Rationale
o Industry players (readily available off takers) support
o Huge employment opportunities
o Facilitate procurement set asides
o Providing solution to national problem (waste management and improving food
security)
o Facilitate rural development
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
28
Case Study: Dr Kenneth Kaunda District Municipality (Dr
KKDM) Waste Recycling Co-operatives
sefa has approved an amount of R25 million to eight waste
recycling co-operatives for acquisition of equipment for waste
recycling plant and working capital.
Dr. KKDM will provide a grant amounting to R6 224 400 to
finance the existing building renovations and extensions.
The eight co-operatives will form a secondary co-operative
which will own a waste recycling plant and they will jointly be
responsible to operate the plant.
Each co-operative will operate a waste collection centre and in
turn deliver the waste to the sorting and baling plant.
Once sorted and baled by the plant, the waste will be sold to
Neopak in terms of the off-take between the secondary co-
operative and Neopak.
Refurbishment of the existing building has commenced. Two
contractors have been appointed by the Municipality. Equipment
orders have been placed.
Key information• Location: 64 wards in Dr Kenneth Kaunda District
Municipality (Dr KKDM)• Jobs created: 320• Funding amount: R25 million for acquisition of
equipment for waste recycling plant and working capital
• Key Partners: Dr KKDM (infrastructure refurbishment cost of R6.2m and lease thereof); Neopak (technical support), 8 Primary Co-operatives
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
29
Case Study: Chris Hani Co-operative Development Centre (CDC)
Partnership.
sefa approved R9.6 million loans for 2 incubation sites involved
in cash crop production (Indalo & Lukhanji Secondary Co-
operatives to cover operational and capital expenditure
13 Primary Cooperatives are members of the 2 Secondary Co-
operatives
Incucop is a Technical Partner which also facilitates market
access for the Secondary Cooperatives and will be responsible
for the repayment of sefa loans from the proceeds of the
produce
An incubation entity called Incucop (Pty) Ltd (Incucop) is a CDC
together with Dicla strategic partnership that facilitates the
establishment of Agro Clustering Incubation Models in the CHDM
area in the Eastern Cape.
CDC is plays an oversight role for implementation of the project
and similar in CHDM
Key information• Location: Chris Hani District Municipality
(CHDM)• Jobs created: 32• Funding amount: R9.6 million • Key Partners: Chris Hani Co-operative
Development Centre; Incucop (technical support), 2 Secondary Co-operatives (Incubators) supporting 13 Primary Co-operatives, off-take by Pick n Pay and Spar
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
30
Case Study: Super Grand Partnership
sefa approved a R20 million loan to fund 4 Primary Co-
operatives that are involved in rearing broiler chickens in
Limpopo, Mpumalanga and Gauteng Provinces for
commercial purposes.
Super Grand is playing a role of a technical partner and
ensuring market access
5 Co-operatives (4 funded by sefa) provide the manpower
and broiler houses that currently accommodate 40 000
chickens per cycle ( 35 days).
Super Grand currently has an off take agreement with
Kroon’s abattoir to supply 500 000 broiler chickens every
35 days.
These cooperatives have been able to provide 240 000
broilers since October 2013 and this results in shortage
260 000 chickens, hence the request for funding for sefa
to increase the existing capacity by adding chicken houses
that can take 50 000 chickens.
Key information• Location: Gauteng,Mpumalanga &
Limpopo• Jobs created: 26• Funding amount: R20 million • Key Partners: DRDLR, DoA, 4 Primary Co-
operatives, Super Grand (technical support); Kroon’s Abattoir off-take,
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
31
Case Study: Ntirhisano Shared Services Centre Co-operative -
School Feeding Scheme Bulk Buying
Approved R15 million facility Ntirhisano Shared Service Cooperative
Ltd (Ntirhisano) is owned by 23 black women and was established
to provide business support and negotiate contract on behalf of co-
operatives participating in feeding scheme with the Gauteng
Department of Education.
sefa and Ntirhisano signed a Cooperation Agreement in terms of
which it will provide support and bulk buying services to enterprising
members with tenders from the Department of Education.
Signed funding agreements individual enterprising members
Funds for stock is disbursed directly to the suppliers upon written
request by Ntirhisano.
The stock is delivered to Ntirhisano warehouse where the members
collect and deliver to schools.
Repayments are done directly to sefa by the 13 enterprising
members through stop orders.
Key information• Location: Gauteng• Jobs maintained: 13• Funding amount: R15 million • Key Partners: Gauteng DoE School Feeding
Scheme
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
32
SUMMARY OF APPROVALS TO DATE (FY2015/16)
DR KKDM Waste Recycling Secondary Co-operative: R25 million for capital and
operating expenditure, 8 primary co-operatives funded. A total of 64 coops (320
members) will service 64 wards (R11.1m disbursed)
Chris Hani Co-operative Development Agency Partnership: Two Secondary Co-
operatives (Indalo & Lukhanji) involved in Cash Crop production funding of R9.6
million for capital and operating expenditure. A total of 13 primary co-operatives
(157 members) are involved in this project (R6.4m disbursed)
sefa Super Grand Joint Venture: R20 million for capital and operating expenditure
of 4 Primary Co-operatives (25 members) in broiler business in Mpumalanga and
Limpopo (R11.1m disbursed)
sefa ABSA Tshepo 10 000 Facility: R10 million for City of Tshwane contracted and
trained co-operatives, targeting youth owned co-operatives (at negotiation phase)
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME
33
P1.4 CO-OPERATIVE LENDING PROGRAMME– STRATEGIC OUTPUT
Strategic Indicator
Projected
2015/162016/17 2017/18 2018/19 2019/20 2020/21
Total –
Strat Plan
ApprovalsCFIs (R’000)
1 000 2 500 5 000 7 000 8 000 10 000 33 500
ApprovalsCo-operatives(R’000)
96 000 50 000 61 750 82 250 87 250 94 775 375 025
Disbursements (R’000)
47 500 33 500 41 500 54 500 56 500 61 850 247 350
Enterprises Financed
86 95 105 116 127 140 583
JobsFacilitated
688 760 840 928 1 016 1 118 4 662
34
PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.5 KHULA CREDIT GUARANTEE PROGRAMME
Strategic Initiatives
• Extend coverage to include a wider range of financial institutions and commercial suppliers of inputs to SMMEs and Co-operatives
• Introduce flexibility of terms and conditions to increase attractiveness of products and services to the targeted SME financiers
• Develop, pilot and market new products and services
• Introduce risk based pricing
Strategic Objective
To expand the utilisation of the Credit Indemnity
Scheme by increasing the number of participating
institutions, introduction of new products and the
streamlining of business processes and systems.
35
P1.5 KHULA CREDIT GUARANTEE PROGRAMME– STRATEGIC OUTPUT
Strategic Indicator
Projected
2015/162016/17 2017/18 2018/19 2019/20 2020/21
Total –
Strat Plan
Approvals(R’000)
12 500 260 000 320 000 380 000 440 000 500 000 1 900 000
Disbursements (R’000)
12 000 80 000 180 000 250 000 350 000 500 000 1 360 000
Enterprises Financed
94 381 1 428 2 238 4 047 4 143 12 237
JobsFacilitated
470 1 905 7 140 11 190 20 235 20 712 61 182
36
PROGRAMME 2 – POST INVESTMENT MANAGEMENT
Strategic Initiatives
• Implement a pro-active approach in the identification of early warning signals for portfolio investments
• Enhance the functionality of the Investment Monitoring Committee (IMC
• Implement a differentiated approach towards the monitoring of different loan types
• Capacitate the Workout and Restructuring capacity
• Enhance the Mentorship Programme to develop client sustainability
• Establish partnerships to provide value added services to sefa clients.
• System enhancement and automation– dash board reporting, collateral management system
Strategic Objective
To reduce the level of impairments and the
establish of a developmental approach
towards client sustainability.
37
POST INVESTMENT MANAGEMENT PROGRAMME– STRATEGIC OUTPUT
Strategic Indicator
Projected
2015/162016/17 2017/18 2018/19 2019/20
Impairment
management40% 29% 23% 21% 19%
identification of
early warning signals
for portfolio
investments
Within one month
of the NPL status
Within one month
of the NPL status
Within one month
of the NPL status
Within one month
of the NPL status
Establishment of
workout and
restructuring
business
10% - success
rate for
turnaround
and
restructuring
interventions
15% - success rate
for turnaround
and restructuring
interventions
20% - success rate
for turnaround
and restructuring
interventions
25% - success rate
for turnaround
and restructuring
interventions
30% - success rate
for turnaround
and restructuring
interventions
Initiate value added
support service
partnerships for sefa
funded clients
- 1 Partnership 2 Partnerships 3 Partnerships 4 Partnerships
38
PROGRAMME 3 – BUILD AN EFFICIENT AND EFFECTIVE SEFA THAT IS PERFORMANCE DRIVEN AND SUSTAINABLE
Strategic Initiatives
• Financial Management• Contain costs and increase collections on loans and
disbursements• Design, develop and implement sefa’s sustainability• Efficient and effective management of sefa’s cash resources
• Human Capital Management• Focused initiatives on enhancement of sefa employee
skills base• Building sefa entrepreneurial culture and values
based system• Invest in organisational development & change
management programs• Improving Employee well-being, and harmonised
working environment• Provisioning of adequate, safe and secure employee
working environment
• INFORMATION AND COMMUNICATION TECHNOLOGY• Enhancement of sefa Loan Management System• Expansion and Enhancement of the sefa back-end
infrastructure
Strategic Objective
To develop and implement an effective and efficient
back-office support system.
39
PROGRAMME 4 – BUILD A STRONG AND EFFECTIVE SEFA BRAND EMPHASIZING ACCESSIBILITY TO SMMES
Strategic Initiatives
• To position sefa is a funder of choice amongst SMME’S and Cooperatives and grow the customer base
• Improve national accessibility through the roll-out of access points (through co-locations) in each municipal district of South Africa
• Specific outreach to township and rural economies
• Develop a culture of client excellence.
Strategic Objective
To position sefa as a funder of choice amongst SMME’S
and Co-operatives.
40
PROGRAMME 5 – PROPERTY MANAGEMENT
Strategic Initiatives
• The management of the external propertymanagement agency Improve financial sustainabilityof the property portfolio
• Implementation of a debt collection strategy
• Settlement agreement with tenants for longoutstanding debt and ownership disputes
• Finalise sale agreements and negotiations with the -GAPIPA and OWIPA tenant organisations
• Forge private and public strategic partnerships withkey stakeholders with a common interest in therevitalisation and modernisation of the sefa propertyportfolio and thereby mitigate compliance (healthand safety) and insurance risk
Strategic Objective
Ensure that the value of the sefa property portfolio is
preserved and maintained and strategically utilised to
provide affordable infrastructure to small and medium enterprises that is
aligned to the sefa organisational strategy
.
41
STRATEGIC OUTCOMES - APPROVALS AND DISBURSEMENTS
Projected2015/16
2016/17 2017/18 2018/19 2019/20 2020/21Total
over theStrat Plan
Value of Approval via all loan products(R'000)
1 069 387 884 610 1 111 318 1 465 018 1 662 221 1 858 277 6 981 445
Disbursements to SMMEs and Co-operatives (R'000)
883 555 704 155 977 817 1 360 689 1 589 010 1 859 683 6 491 354
0
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
7 000 000
8 000 000
42
STRATEGIC OUTCOMES -ENTERPRISES FINANCE AND JOBS FACILITATED
Projected2015/16
2016/17 2017/18 2018/19 2019/20 2020/21Total overthe Strat
Plan
No of SMMEs and Co-operatives finance 42 758 47 055 52 797 58 816 66 305 72 668 297 641
No of Jobs Facilitated 67 048 72 998 85 476 97 732 115 538 125 756 497 499
0
100 000
200 000
300 000
400 000
500 000
600 000
43
DEVELOPMENT IMPACT TO TARGETED GROUPS
Black-ownedEnterprises
(R'000)
Women-owned
Enterprises(R'000)
Youth-ownedEnterprises
(R'000)
Township-owned
Enterprises(R'000)
Enterprisesowned by
people livingwith Disability
(R'000)
Enterpriseslocated in
priorityprovinces
(R'000)
Disbursements to
enterprises -value less than
R500k
2020/21 1 322 876 850 420 566 947 416 809 37 796 811 857 883 629
2019/20 1 112 307 715 055 476 703 357 481 31 780 697 555 777 285
2018/19 952 482 612 310 408 207 306 880 27 214 599 810 681 933
2017/18 684 472 440 018 293 345 219 902 19 556 431 018 498 231
2016/17 492 909 316 870 211 247 159 640 14 083 312 870 369 436
Projected 2015/16 618 488 397 600 265 066 210 689 14 013 397 000 372 776
0
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
44
BALANCED SCORECARDPERSPECTIVE OBJECTIVE MEASURE TARGET/ INDICATOR
SUB-PERSPECTIVE -
WEIGHT
CUSTOMER
PERSPECTIVE
Access to
finance by
SMMEs and
development
Impact
Total Approvals R 884 610 6%
Total Disbursements to SMMEs and Co-operatives via
all loan product channels (R'000)R 704 155 15%
Approvals in terms of productive to industrial sectors
identified in IPAP and NGP (R'000)
40% of loan book
approvals2%
Number of SMMEs financed 47 000 2%
Number of Jobs facilitated 73 000 2%
Facilities disbursed must be youth-owned - 18-35
years oldR 211 000 3%
Facilities disbursed to enterprises in priority rural
provincesR 312 000 3%
Facilities disbursed must be women-owned
businessesR 317 000 3%
Facilities disbursed must be black-owned businesses R 493 000 2%
Disbursements to township-owned enterprises
(R'000)R 159 640 3%
Facilities less than R500K disbursed to end-users R 369 436 3%
Facilities to People Living with Disabilities R 57 461 3%
Level of Customer Satisfaction 60% 3%
Sub-Total 50%
45
BALANCED SCORECARD (CONT.)
Perspective Objective Measure Target/ IndicatorSub-Perspective -
Weight
FINANCIAL
PERSPECTIVE
Building sefa
financial
sustainability
Cost to income ratio (excluding
Impairments, finance charges &
government grants)
157% 10%
Accumulated Impairments provision as a
percentage of total loans and advances –29% 14%
Growth in interest and admin fees
generated from loans6% 3%
Sub-Total 27%
INTERNAL
BUSINESS
PROCESSES
Improve
turnaround times
for application
approvals
Number of days bridging loans 20 days 3%
Number of days for terms loans 30 days 3%
Number of days for wholesale application 45 days 3%
System
Development and
process
automation
Enhancement to the loan management
system and key organisational business
process automated.
40% automation of
key business process
automated (reduction
in the business
process cost and
process times)
5%
Sub-Total 12%
46
BALANCED SCORECARD (CONT.)
Perspective Objective Measure Target/ IndicatorSub-Perspective -
Weight
PEOPLE
LEARNING AND
GROWTH
Development,
optimisation
and motivation
of human
capital
Labour Turn Over Rate (LTO)
of critical/ strategic
positions
7.00% 2%
Improvement in Employee
Satisfaction Index70.00% 3%
Implemented IDP’s that
enhance prioritised
organisational core
competencies (as per 3E
Development Framework –
Due Diligence/Financial
Analysis/Project
Management/Coaching
Skills)
80.00% 6%
Sub-Total 11%
Total 100%
47
BU
DG
ET O
BJE
CTI
VES
Work within current funding available & maintain positive cash balances over the MTEF period.
Reduce losses over 5 year period and break-even by 2020/21 FY
Decrease impairments, especially in the Direct Lending operations to 24% by 2020/21 FY
Downscale Direct Lending operations in the short-term to enable collection strategies to be put in place
Head count freezes over 5 year period with an allowance for annual cost of living adjustments
Properties to break-even by 2021
SEFA 2017-2021 FINANCIAL POSITION
48
4949
50
51
Year on year, interest income is forecasted to increase at a slower rate due to decreased disbursements, high impairments & suspended interest.
REVENUE incl. government grantRevenue (incl. govt grant) is forecasted to decrease by 13% over the MTEF period (3 years), driven by decline in ECSP allocation of approx. +/- R200m pa.
REVENUE excl. government grantsefa aims to increase Revenue (excl. govt grant allocation) by 45% in 3 years time and 103% in 5 years time.
COST MANAGEMENT AND IMPAIRMENTS Overall expenses and impairments on loans remain high and will result in a net cumulative loss after tax (incl. govt grant) of R188 million over the MTEF period, but impairments ratio is forecasted to decrease from 33% in FY 2016 to 17% in FY 2021. Contain salary bill, and freeze HC
REVENUE GROWTH AND COST MANAGEMENT
52
CASH SOURCES
2021 2020 2019 2018 2017 2015 YTD Dec 2015
Total 1,295,469 934,170 1,099,013 725,850 647,421 552,343 539,273
Sub -total funding -External
440,341 250,000 607,347 253,780 213,124 304,798 283,845
MTEF 340,341 295 949 257,347 223,780 213,124 151,798 76,241
ECSP - - - - -153,000 207,604
IDC loan 100,000 250,000 350,000 30,000 -
Capitalisation - - - -
Sub-total Collections from clients
838,344 635,084 411,642 422,994 434,297 247,545 255,428
53
OPERATING EXPENSES
-
100 000
200 000
300 000
400 000
500 000
600 000
700 000
2016 2017 2018 2019 2020 2021
R'000
Investment property expenses
Movement on impairments
54
Thank
you